Consequences of Agent's Contract

Enforcement and consequences of agent's contracts

Contracts entered into through an agent and obligations arising from acts done by an agent, may be enforced in the same manner, and will have the same legal consequences, as if the contracts had been entered into and the acts done by the principal in person. Section 226

Contracts by agent

A contract made by an agent is binding on the principal for whom it is made. Thus the manager of a mine can make a contract binding on the owner of the mine.

Compromise by agent

A compromise by an agent on behalf of his principal is valid. Thus a compromise with the authorized attorney of a pardanahnashin lady is valid.

Payment made to agent

A payment to an agent is a payment to the principal. Thus where a military contractor, according to rules, deposited a certain sum in the bank by way of security. The bank issued a deposit certificate in the name of the military authorities. The bank subsequently went into liquidation. It was held, that the bank had become an agent to the military authorities, and on its failure to pay the military authorities were liable to pay.

Sale transactions

It is wrong to assume that every "general" Power-of-Attorney on account of the said description means and includes the power to alienate or dispose of property of the principal. In order to achieve that object it must contain a clear separate clause devoted to that object.

Liability of principal for acts of agent

A representation by an agent is as effectual for the purposes of estoppel as one made by the principal. The liability of the principal upon a contract made on his behalf is not affected by the bare fact of the agent's personal liability and the credit given to the agent by the other contracting party.

Agents are of two kinds, distinguishable as servants and independent contractors. When the agent is an independent contractor, his employer is not. in general, answerable for the torts either of the Contractor himself or of his servants. But when the agent is a servant, his employer will answer for all torts committed in the course of the employment, whether or not the employer has obtained any benefit there by. The distinction between a servant and an independent contractor is that the former is to obey his employer's orders from time to time and works under the supervision and direction of his employer; Whereas the latter is to exercise his own discretion as to the mode and time of doing work for which he has been engaged; he is bound by his contract but not by his employer's orders.

Suits by principal

A principal can sue on a contract entered into by his agent. Thus where the goods were consigned from Pakistan to be delivered in India. Pakistan Railway carried the goods to the border and Indian Railway received them. It was the consignor who paid the Indian Railway. In a suit for damages, it was held that the Pakistan Railway made the contract with the Indian Railway as an agent of the consignor for delivery of goods to the consignee, and the consignor can therefore enforce the contract against the Indian Railway.

Suit against principal or agent

The liability of the principal and the agent when concurrent is alternate. The person contracting with the agent can sue either the agent or the principal. If, however, he sues the agent to judgment, he cannot afterwards bring a second action against the principal even though the judgment is unsatisfied and the plaintiff had no knowledge of the existence of the principal.

Acts in excess of agent's authority

An act of an agent in excess of his power-of-attorney does not bind the principal. The authority conferred by a power-of-attorney must be adhered to strictly, and if the authority is exceeded, a third party will be unable to make the principal liable.

Unauthorized acts of agent

The principal is liable to the extent of the benefit received in an unauthorized transaction. Where an agent borrowed for the principal without his authority but the money was credited to the principal's account, the principal is liable to pay back the amount.

Negligence of agent

The master is liable for the negligence of his agent. Therefore where A drew a bill in favour of B on C and gave it to B's agent. B's agent had asked A for a bill drawn on himself and not on C but he kept the bill without ascertaining its nature for some time. In the meantime C became insolvent. It was held that assuming both parties were under a mistake as to the bill. B could not recover the amount of the .bill from A, as his agent had been guilty of gross negligence in taking the bill and keeping It without ascertaining its nature.

OPEN →

Law of Contract Proposal, Promise and Agreement

1. Proposal

When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal. Section 2(a)

a. Proposal or offer

A proposal is merely an offer to be bound by a promise. It is declaration by the proposer of his intention to be bound by an obligation if the offeree fulfill or undertakes to fulfill certain conditions. It is only on the acceptance of the offer or proposal that the offer becomes a promise. Therefore, when an instrument is so worded as to be binding on the proposer, it is in point of law only an offer and until both parties are bound, neither party is bound. Such instrument was no more than proposal because unless the person to whom the offer was made signifies his willingness's to accept it, the proposer would not in law, ripens into an agreement.

An agreement between the parties, wherein, vendee had agreed to re-convey the property to the vendors as soon as they themselves had raised the money was a unilateral offer by the vendee to vendors, containing no indication that such offer was accepted by the vendors, for none of them had signed that lqrarnama in token of its acceptance.

b. Offer must be clear

An offer which does not contain any particulars as to the thing offered does not constitute a proposal properly so called. Therefore where one person by a letter asks the consent of another to a certain transaction without stating the consideration, it is not an offer.

c. Term of proposal

A "term of the proposal" signifies a condition without the fulfillment of which the proposer is not willing to undertake the' obligation. Whether a particular condition proposed amounts to a term of the proposal depends upon the intention of the proposer.

d. Inquiry or negotiations prior to offer

An inquiry or negotiation between the parties prior to the making of an offer cannot be called an offer or proposal. A where the Honorary Secretary of a bank had an informal talk with a person to enquire whether he would purchase a land made a report to the bank on certain conditions but not as representing the bank and later made a report to the bank that the person had assured to purchase the land; it was held that what took place between the two was only an enquiry on the one hand and an assurance on the other. It could not amount either to offer or a contract.

e. Statement not requiring acceptance is not an offer

To constitute an offer the statement by one party must be such as would require acceptance by the other party to become effective. A statement which is unilateral in nature and complete in it would not amount to an offer. Thus a circular by a bank to its debtors which signifies them its intention to raise the rate of interest without obtaining their consent to the increase and only intimates to them its unilateral decision to enhance the rate as from the date of the notice, cannot be said to be a proposal as defined.

f. Undertaking to make an offer

A mere undertaking to make an offer in the future in case of certain contingency is not an offer. Thus a term in a partition deed that in the event of any of the brothers wishing to sell his share of the house. he should sell it to the other brothers at the market value is not an offer itself but merely, an undertaking to make an offer of sale upon the arising of a certain contingency.

g. Place where offer is made

Where the offer 'is made to a party within the jurisdiction of the High Court at B but the latter neither resides nor carries on business within the jurisdiction of the High Court at the offer cannot be said to have been of action in respect of that transaction can, be have arisen within the jurisdiction of the High Court.

h. Invitation to offer

In cases of invitations for orders, a contract would come into being only when the invitee places an order and the invitor accepts the same catalogue of the good of a company for sale is not a series of offers but only invitation for offers.

i. Bids at auction sale

An advertisement for auction was merely an invitation to bid as distinct, from an offer to be bound to sell. Therefore a bidder at an auction merely makes an offer to buy which he can withdraw until it is accepted.

j. Pre-conditions for making a proposal

Where there is a precondition for making an offer such as pre-qualification for making a bid for a contract. An offer made by petitioner who had not applied for pre-qualification in response to respondent's notice, having missed the bus had to lag behind on account of their own lethargic conduct. The petitioner would thus be disqualified from making an offer and their offers may not be considered while granting the contract.

2. Promise

When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted becomes a promise. Section 2(b)

a. Promise

The word 'promise' in the act is used in a Narrow sense to mean an accepted proposal .It is not the same thing as an agreement which is defined under clause (e). The technical use of the word 'promise' in the Court Act is far narrower that the popular use. Express' words of promise often are in law no narrower than a proposal. A proposal is merely an offer to be bound by a promise and a promise in law is an accepted proposal. It is the promise only which can give rise to an agreement which, if enforceable by law, is a contract, but if not, is a void agreement.

b. Agreement to be bound oath

An offer to abide by the oath of opposite party and acceptance of such offer by the other party is in the nature of agreement. Where defendant having him offered to be bound by the oath and having signed a statement to that effect along with his counsel, was bound by such oath.

c. Conditional offer

Where an offer is made subject to a condition and that offer is accepted, the person accepting the offer must be presumed to have accepted it with the condition so attached and he cannot be heard to say that though he accepted the offer, he was not bound by the condition.

d. Acceptance of offer

A mere offer is not binding. It is only when an offer has been perfected by acceptance that parties. Thus 'where fixation of rate at specified amount was permissible under terms of contract and the same was accepted buy respondent, such rate became conclusive and could not be recalled.

e. Communication of offer Necessary

An offer unless it is communicated to the other party is not capable of acceptance. Hence, where a' party merely makes a have made any offer.

f. Knowledge of Offer

There cannot be an acceptance of an offer which has not come to the knowledge of the offeree. A reward offered for the search of a missing boy cannot be claimed by a person who found the boy if he did not undertake the search with knowledge of the offer.

g. Intention of offeror

Where intention of the offeror was to sell all the properties, at a uniform rate, the offeree cannot accept a portion of it and claim specific performance of that portion of the contract.

h. Addition to and variation of terms of offer

The offeree cannot add to or vary the terms of the offer and accept t s so varied. He can only make a counter offer if he does not accept the offer made. But he can, if his counter offer fails, accept the original offer repeated by the offeror on the occasion of his refusal to accept the addition or variation.

i. Silence of offeree

Where a person receiving an offer through a letter remains -silent, he cannot be taken to have accepted it by his silence. A communication by one party to another to reply within a definite time, or else he would lose the benefit of his contract, would be only a one-sided offer, and no acceptance of such offer can be presumed from his mere silence or the omission to reply by the offeree within the time.

j. Acceptance subject o reducing contract into writing

Where an offer is accepted and it is said that the contract would be reduced into writing, the contract is 'complete as soon as the offer is accepted and the writing would be only incidental to the completion of the contract.

k. Shares of companies

In the case of an ordinary member of public to take shares in a company is completed when an application for shares has been submitted, and allotment on the foot of that application has been made and the notice of the allotment has been communicated to the applicant.

l. Resale or repurchase of shares

Where in case of a contract of re-sale and re-purchase of shares, defendants entered into the contract of sale of shares as independent owners and not as Managing Agents of third party and made certain guarantees in relation thereto. They were liable to re-purchase the shares on the expiry of stipulated period of four years.

m. Contract by correspondence

Where it is sought to establish a contract by correspondence, the rule is that whole of the correspondence relating to the matter in question must be locked at for the purpose of finding out at what stage there was, if at all, a complete are definitely agreed upon by letters, the mere fact points of a proposed contract are definitely agreed upon by letters, the made to a more fact that in the course of the correspondence reference had been made to a more formal agreement to subsidiary non-essential stipulations, will not prevent the Court from considering the agreement arrived at by the letters as concluded, of once a definite offer has been made and it has been accepted without qualification and it appears that the letter of offer and acceptance contain all the terms agreed upon between the parties, the complete contract thus arrived at cannot be affected .by subsequent negotiations, and no testimony aliened is' admissible. Subsequent letters cannot be referred to, to aid in construing the contract contain d in the material letters.

3. Agreement

Every promise and every set of promises, forming the consideration for each other, is an agreement. Section 2 (e)

a. Promise and agreement

Every "promise" as defined by clause (b) of section 2 is not necessarily an "agreement" falling within clause (s) also. The acceptance a promise ripens into an agreement only after an offer has been accepted by, the offeree and until there is such an agreement the question whether there was any consideration for the promise would not arise at all.

Where elements of offer of sale, acceptance of such offer and consideration were fully established by evidence on record, the same was held to be specifically enforceable.

b. Executed and executory agreement

Agreement is of two kinds executed and executory. In an executed agreement one party has already performed his part of the agreement while the other party has to perform his part. In an executory agreement both the parties have to perform their mutual promises and the fact that they have to perform their parts of the contract does not affect the validity of the contract. Once the contract has passed the executory stage and become a completed transaction, non-payment of price no longer remains a ground for avoiding the contract itself. The only remedy of the seller is to recover the price.

 

c. Agreement to sell

An agreement to sell does not create any right, title or interest in immovable property.

d. Agreement for sale

There can be an agreement for sale of future goods. These goods include growing crops and things attached to or forming part of the land which are agreed to be severed before sale or under eth contract of sale. Thus corn, grain, potatoes, can from subject matter of contract for sale of goods.

OPEN →

Concept of consideration as expounded by the Contract Act

Consideration

When, at the desire of the promisor the promisee or any other person who has done or abstained from doing, or does or abstains from doing, or promises to do or to abstained from doing, something, such act or abstinence or promise is called a consideration for the promise. Section 2(d)

At the desire of the promisor

The word "at the desire of the promisor" in S.2 do not necessarily contemplate a promisor who, at the time, possesses contractual liability.

Essentials of consideration

Consideration is what moves from the promisee whether it be an advantage to the, promisor or a detriment suffered by the promisee where parties have lawfully entered into mutual commitment, whit open eyes and free volition, maturing into contractual obligation; such cannot easy be allowed a unilateral and, willful disclaimer.

Consideration must be conducive to contract

The words 'at the desire of the promisor' imply a promise which has a real effect in conducing the contract.

At the desire of third party

Where a person advanced money to the son on an undertaking given by his father and obtained promissory notes for the amount advanced, it was held that those pronotes were without consideration inasmuch as the advances were not made at the desire of the son who was the promisor under the pronotes.

Consideration need not be to the benefit of the promisor

If the promisee does some act by which a third person is benefited which he would not have done but for the promise, the consideration is sufficient. Therefore guarantees executed in favour of plaintiff against loan advanced by plaintiff were good consideration.

Consideration may proceed from third party

The consideration for a promise need not necessarily move from the promisee but may move from a third party. In marine insurance broker's undertaking to pay premium consideration though it moves from a third person.

Compromise as consideration

The compromise of doubtful rights is a sufficient basis of and forms a sufficient: consideration for the agreement. A. compromise is an agreement to put an end to a dispute and to terminate or void litigation, and real consideration is not a sacrifice of right but an abandonment of a claim.

Consideration to one compromiser is consideration to all

Consideration paid to one of several joint promisors is sufficient consideration to support a promise to pay made by others.

Reciprocity is not necessary

Reciprocity of obligations is not of the essence of consideration. An act done of forbearance made in return for a unilateral promise is a sufficient consideration to support the promise.

Inadequate consideration

A smaller sum of money advanced can validly constitute consideration for acceptance of liability to a bigger amount by the debtor.

Absence of consideration

A meritorious and a gratuitous consideration such as natural love and affection or obedience and submission by way of respect cannot be good consideration or valuable consideration.

Proof of consideration

Where the document is silent in regard to consideration, but recites the particular consideration which induced the party to execute the document it will not be competent for the party to show that in addition therefore, but on which the document there was some other document therefore, but on which the document is silent. But recital in contract that the vender has received consideration can be him, by proving a collateral agreement to the effect that money was to remain it the vendee for a specific purpose.

a. Onus of proof

Onus of proving that there was no consideration rests on the person who denies it. When execution of a document and receipt of consideration has been admitted at the time of registration, the burden of proving non-receipt of consideration falls upon the party who makes such allegation.

b. Who can challenge payment of consideration?

The law does not allow strangers who have no interest at stake to intermeddle with the affair of other persons. Hence no stranger can challenge a transaction on the ground of want of consideration.

Future promise as consideration

A promise to do something in future is legal consideration. A promise so long as it remains executor will not amount to consideration on the eye of the law unless it involves a legal obligation which the promisor could be compelled to perform. But where it involves no such obligation its execution alone will constitute sufficient consideration.

OPEN →

Concept and Scope of Contract

Contract

An agreement enforceable by law is a contract; Section 2(h)

(a) Definition

To constitute an agreement, it was necessary that there was an unconditional offer and sale was accepted by competent person or authority giving rise to accrual of 'rights to parties to such agreement. Where a tenderer made an offer to purchase certain property and attached conditions thereto, an agreement could not come into effect unless conditions were also accepted by Authority issuing tenders. Offer of tenderer having not been excepted by Authority, no right had accrued to such tenderer on basis of his conditional offer.

(b) Oral

A contract can be entered into orally or in writing. Oral agreement would be valid and enforceable as a written agreement provided it fulfilled all the requirements of a valid contract. Oral agreement, however, requires for proof clearest and most satisfactory evidence. 'From the respondent had not signed any of the documents or no document was duly signed by both parties, it cannot be inferred that no valid agreement existed.

c. Parties necessary for contract

Since a contract can only be bilateral and the same cannot be party on both sides, there can hardly be a contract between a on the one side a and b on the other side, particularly in a contract of employment.

d. Contract between more than two parties

A contract may be made by more than two parties.

e. Stage when contract is made

A contract does not hold good against the law of the land which may be enforceable for the time being as public law. The question whether the parties had reached a concluded contract or not, is a question of fact to be deduced from the correspondence, and other documentary and oral evidence. The true test for deciding this question is to ascertain whether the parties where of one mind on all the whether they intended that the matter was closed and finalized between them and whether they time it is said to have been finalized between them and whether they intended that the :matter was closed and concluded between them.

f. Agreement to contract is not a contract

Where the parties agree to enter - into a contract such an agreement is not a contract in law at all. An agreement to sell per se does not create title in property. Such agreement only creates a right to obtain another document. No registration of it is requited even though it contains acknowledgment of receipt of earnest money or part payment of price.

(g) License

A license is in the nature. of a privilege conferred to do that which it would not have been permissible for the licenses to do otherwise. Therefore the arrangement, by which a liquor license was- enabled to sell excusable liquor under a license, cannot be described as a contract.

(h) Not enforceable a agreement

Contract implies free and conscious agreement between two Parties with regard to their rights and liabilities arising out of a particular transaction. Contract binds both the parties and such Contracts are subject to the law of the land.

i. Promise without consideration

A promise without consideration is unenforceable in a Court of law and cannot amount to a contract between the parties.

j. Variation of statutory liability

It is perfectly legal for parties to a transaction to agree that their liabilities should be different from that created by statutes and a contract containing such an agreement should be given effect to provide their intention to so vary the liability is clear beyond doubt from the terms of the contract itself.

k. Cancellation or alteration of contract

A party to a contract is not entitled in law to cancel a concluded contract unilaterally. Having entered into an agreement, it is not open to the defendant to resile from the same on untenable grounds as he pleases. Therefore, such a cancellation has no effect in law.

l. Non-performance of his part of contract

Where petitioner was awarded contract, he was required to deposit 5 per cent. Of contractual amount but he failed to do so. Petitioner could not claim that such contract could not: be awarded to any body without notice to him.

(m) Unilateral alteration in terms of contract

Once a contract was concluded terms thereof, could not unilaterally .be any one of the parties to such contract. If while a written contract remains executor, a party unauthorized so alters it as to very its legal effect do his advantage, whether he meditates a fraud or not or if, which the positive intent to defraud, he makes in it any alteration whatever-or, if another thus alters it under authority from him or, if one to whose custody he simply commits it makes in it a material alteration advantageous to him, then, at the election of the other party, he is estopped from relying upon it in a Court of justice.

(n) Unilateral addition to terms is not permissible

Where however, power to increase rates unilaterally is given by the contract. Such increase cannot be challenged as improper.

(o) Alteration in public interest

Where the 'purchaser of a shop in a plaza claimed that no deviation from stipulation except by mutual consent or with intendment to benefit members of public, could be permitted, such as reservation that no deviation had been made and that slight alteration, such as reservations of two parking floors, who chose to daily come to daily come up with their offer in response to general invitation: High Court upheld the contention of the defendant.

p. Unilateral rescission of contract

A contract or agreement duty entered into between parties cannot be unilaterally rescinded.

q. Extension of contract after its expiry

Where original contract had expired and there was no fresh agreement, and parties had continued previous relationship contract was deemed to have been extended, with modification of the contract if the same was.

For specific period; extended contract was deemed to be without any specified period on day to day or month to month basis with rest of terms and conditions being identical to earlier.

r. Loan granted on installment basis recall of on non-payment of one installment

Where bank had granted a loan and loan amounts were to b repaid in 24 bit annual installments. It was, held that balance installments, under terms of loan agreement could always be recalled by plaintiff (Bank) in case of default on the part of defendant.

(s) Contract between government and private individual

All parties to a contract are equal before law. Therefore despite the fact respondents were officers of a agreement in question, their position and status was equal.

(t) Denial of execution of contract

Where a person denies due execution of a contract signed by him, he must prove any allegation which negative the existence of the agreement. A defendant's plea in written statement, that he had signed blank forms, not be substantiated for his failure to cross-examine plaintiff's witness and non-production of evidenced in support of such plea was turned down.

(u) Contract containing term as to cancellation

Where under a contract political Agent was competent to cancel at any time without assigning any reason on issuing 15 day prior notice. But the contract was cancelled without giving such notice. Though the action was improper and wrong yet political Agent cannot be said to have acted without. Jurisdiction, illegally and with mala fide intention.

v. Constitutional jurisdiction

No contract can be enforced through Constitutional petition.. If in every contractual matter giving rise to enforcement of contractual Obligation or dispute which could be redressed through other remedy available under the law, constitutional petitions were entertained, then the same would defeat the very purpose of law under which competent Courts were established and vested with jurisdiction under the law.

w. Public contract awarded illegally

Where a public contract was awarded to a person through negotiation and not through public auction. Such exercise was patently mala fide and without jurisdiction and contract awarded to such person was without lawful authority and of no legal effect and it may be declared so in Constitutional jurisdiction.

x. Third party cannot seek of contract

On the touchstone of Islamic' Rules of interpretation, which unless excluded. otherwise, under present Constitutional set up the Court are bound to apply in preference to the contract so-called accepted rules of interpretation under the other jurisprudential concepts (and the fiscal laws are no exception in this behalf) a third party such as income-tax Authorities cannot change the nature of the contract intended by the parties thereto, under the pretext that the rule of interpretation of a fiscal law in this behalf is different.

OPEN →

When and how a proposal may be revoked

1. Proposal

When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal. Section 2(a)

a. Proposal or Offer

A proposal is merely an offer to be bound by a promise. It is declaration by the proposer of his intention to- be bound by an obligation if the offeree fulfils or undertakes to fulfill certain conditions. It is only on the acceptance of the offer or proposal that the offer becomes a promise. Therefore, when an instrument is so worded as to be binding on the proposer, it is in point of law only an offer and until both parties are bound, neither party is bound. Such instrument was no more than a proposal because unless the person to whom the offer was made signifies his willingness to accept it, the proposer would not in law, ripens into an agreement.

(b) Offer must be clear

An offer which does not contain any particulars as to the thing offered does not constitute a proposal properly so called. Therefore where one person by a letter asks the consent of another to a certain transaction without stating the consideration, it is, not an offer.

c. Term of proposal

A "term of the proposal" signifies a condition without the fulfillment of which the proposer is not willing to undertake the obligation. Whether a particular condition proposed amounts to a term of the proposal depends upon the intention of the proposer.

d. Undertaking to make an offer

A mere undertaking to make an offer in the future in case of a certain contingency is not an offer. Thus a term in a partition deed that in the event of any of the brothers wishing to sell his share of the house, he should sell it to the other brothers at the market value is not an offer itself but merely an undertaking to make an offer of sale upon the arising of a certain contingency.

e. Invitation to offer

In cases of invitations for orders, a contract would come into being only when the invitee places an order and the inviter accepts the same.  A catalogue of the good of a company for sale is not a series of offers but only invitation for offers.

f. Pre-conditions for making a proposal

Where there is a precondition for making an offer such as pre-qualification for making a bid for a contract. An offer made by petitioner who had not applied for pre-qualification in response to respondent's notice, having missed the bus had to lag behind on account of their own lethargic conduct. The petitioner would thus be disqualified from making an offer and their offers may not be considered while granting the contract.

2. Revocation of proposals and acceptances

A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposal, but not afterwards. An acceptance may be revoked at time before the communication of the acceptance is complete as against the acceptor, but not afterwards. Section 5

(a) Revocation of  proposal

Under section 5 of the Contract Act a proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer. An offer to sell and to keep the offer open till a certain time is Nudum Pactum and, can, at any time before acceptance, be recalled.

b. Conditional Acceptance

A proposal which is accepted conditionally may be revoked before the acceptance becomes unconditional. A bidder at an auction sale only makes an offer which he can withdraw before its acceptance by the fall of the hammer. Where an auction sale is held under the express condition that the acceptance of the highest bid would be subject to confirmation by a particular authority, the bidder could withdraw his offer before such confirmation in spite of the bid having been provisionally accepted.

(c) Completed contract

After a transaction has ripened into a contract it requires the consent of parties to revoke or modify it. Thus once an offer to be bound by the, special oath of the other party has been made by a party and accepted by the. other, it cannot be revoked. He cannot, therefore, be allowed to resile from his offer before the special oath has actually been taken.

d. Counter-proposal

An original proposal becomes superseded by the counter-proposal made by the other party and would not be revived even if the maker of the proposal rejects the counter offer. Quite a different result would however follow if the person making the counter-proposal withdraws it before the other either accepts the counter proposal or rejects it.

3. How revocation is made

A proposal is revoked

i. by the communication of notice of revocation by the proposer to the other part,.

ii. by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is So prescribed, by the lapse of a reasonable time, without communication of the acceptance:

iii. by the failure of the acceptor to fulfill a condition precedent to acceptance; or

iv. by the death or insanity of the proposer, if the fact of his death or insanity comes to the knowledge of the acceptor before acceptance.

Lapse of time after proposal

Where a proposal is not accepted within a reasonable time and no time has been fixed for the acceptance of the proposal, the proposer may revoke the proposal. Thus where application for shares-of a company was made in March and July, 1933 and December, 1934, but there was, no allotment of shares till August, 1935, no notice of allotment being given to the proposer till then: and there was nothing in the conduct of the applicant amounting to waiver of revocation; it was held that S.6(2) applied and the proposals must be defend to have been revoked.

OPEN →